FCA Continues Winning Streak For OEMs On Claims For “Unfair Profit” In Destination Charges

Seyfarth Shaw LLP

On Friday, December 22, 2023, FCA US LLC, the manufacturer of Chrysler, Jeep, Dodge, Ram vehicles, among others, scored the latest in a series of victories for automakers over claims by consumers that “destination charges” for the delivery of vehicles to dealers somehow violated statutory or common law because those charges exceed the actual cost of delivery.  In Enright v. FCA US LLC, a federal district court granted a manufacturer’s Rule 12(b)(6) motion to dismiss a putative consumer class action first filed in October 2021, following decisions from the Ninth Circuit and other federal courts finding that consumers failed to state a claim where there was no allegation that the charge to dealers was somehow different that the charge passed on to retail purchasers.

In Enright, the consumer plaintiffs alleged that manufacturers are required by federal law to place a “Monroney Sticker” on vehicles disclosing to consumers the “destination charge” imposed by OEMs on dealers.  Since 1958, the Monroney Act has required manufacturers to affix a label to each new vehicle prior to sale and delivery to dealers disclosing certain information, including the manufacturer’s suggested retail price for a new vehicle and any charges for the transportation of the vehicle to the dealer.  According to the consumer plaintiffs in Enright, OEMs unfairly secure “phantom freight” from consumers in violation of the New Jersey Consumer Fraud Act (“NJCFA”) and state common law when the destination charge is higher than the actual costs of delivery.

First addressing the consumer plaintiffs’ NJCFA claim, the district court in Enright concluded that the manufacturer had taken no affirmative act or omitted material information when stating on Monroney stickers the “destination charge” to dealers for delivery of vehicles.  The district court cited the Ninth Circuit’s decision in Romoff v. General Motors, LLC, an unpublished decision issued in January 2023, and subsequent trial court decisions—including Beeney v. FCA US LLC, an unpublished October 2023 decision from the federal district court in Delaware—and concluded that the term “charge” is not a “specialized term that requires sophistication or expert knowledge,” and that “consumers every day undoubtedly pay a host of charges and fees with the understanding that sellers price goods and services to make a profit.”  For essentially the same reasons, the court in Enright also found that the consumer plaintiffs had failed to state common law claims against the manufacturer for unjust enrichment or money had and received.

The decision in Enright is the latest in a string of defeats for plaintiffs asserting statutory and common law consumer fraud claims under the laws of California, Florida, Georgia, Illinois, Iowa, Michigan, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Texas.  Perhaps this latest decision will bring to a conclusion the effort to establish claims based on the purported mismatch between “destination charges” imposed by manufacturers and the costs incurred in connection with the transportation of vehicles to dealers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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